Lifeloc (LCTC) 10-Q 13 Aug 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 07, 2020
Document And Entity Information
Entity Registrant Name	Lifeloc Technologies, Inc
Entity Central Index Key	0001493137
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	CO
Entity File Number	000-54319
Entity Common Stock, Shares Outstanding		2,454,116
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Jun. 30, 2020	Dec. 31, 2019
ASSETS
Cash	$ 2,625,098	$ 3,185,996
Accounts receivable, net	539,672	641,239
Inventories, net	2,430,448	1,986,299
Income taxes receivable	153,557	6,750
Prepaid expenses and other	107,777	18,857
Total current assets	5,856,552	5,839,141
PROPERTY AND EQUIPMENT, at cost:
Land	317,932	317,932
Building	1,928,795	1,928,795
Real-time Alcohol Detection and Recognition equipment and software	569,448	569,448
Production equipment and software	976,621	976,621
Training courses	432,375	432,375
Office equipment, software and space modifications	218,074	208,986
Sales and marketing equipment and space modifications	232,600	232,600
Research and development equipment, software and space modifications	172,429	172,429
Less accumulated depreciation	(2,144,016)	(1,959,541)
Total property and equipment, net	2,704,258	2,879,645
OTHER ASSETS:
Patents, net	157,619	145,323
Deposits and other	132,850	74,027
Deferred taxes	98,174	86,658
Total other assets	388,643	306,008
Total assets	8,949,453	9,024,794
CURRENT LIABILITIES:
Accounts payable	358,482	261,798
Term loan payable, current portion	45,966	44,879
Paycheck Protection loan payable	465,097	0
Customer deposits	166,080	214,031
Accrued expenses	210,484	290,458
Deferred revenue, current portion	44,409	45,874
Reserve for warranty expense	45,000	45,000
Total current liabilities	1,335,518	902,040
TERM LOAN PAYABLE, net of current portion and debt issuance costs	1,301,023	1,324,467
DEFERRED REVENUE, net of current portion	3,166	6,066
Total liabilities	2,639,707	2,232,573
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000 shares authorized, 2,454,116 shares outstanding	4,635,727	4,603,304
Retained earnings	1,674,019	2,188,917
Total stockholders' equity	6,309,746	6,792,221
Total liabilities and stockholders' equity	$ 8,949,453	$ 9,024,794

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
STOCKHOLDERS' EQUITY:
Common stock, par value	$ 0	$ 0
Common stock, authorized shares	50,000,000	50,000,000
Common stock, outstanding shares	2,454,116	2,454,116

Condensed Statements of Income

Condensed Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
REVENUES:
Product sales	$ 1,265,698	$ 2,166,634	$ 3,203,564	$ 4,136,735
Royalties	32,851	150,146	92,132	222,984
Rental income	21,489	20,942	42,678	46,764
Total	1,320,038	2,337,722	3,338,374	4,406,483
COST OF SALES	991,969	1,182,588	2,232,229	2,319,147
GROSS PROFIT	328,069	1,155,134	1,106,145	2,087,336
OPERATING EXPENSES:
Research and development	182,485	243,369	479,382	489,168
Sales and marketing	274,780	315,539	601,344	631,922
General and administrative	324,041	295,618	680,928	620,793
Total	781,306	854,526	1,761,654	1,741,883
OPERATING INCOME (LOSS)	(453,237)	300,608	(655,509)	345,453
OTHER INCOME (EXPENSE):
Interest income	3,242	7,850	10,418	17,272
Interest expense	(14,016)	(14,468)	(28,147)	(28,891)
Total other income (expense)	(10,774)	(6,618)	(17,729)	(11,619)
NET INCOME (LOSS) BEFORE PROVISION FOR TAXES	(464,011)	293,990	(673,238)	333,834
BENEFIT FROM (PROVISION FOR) FEDERAL AND STATE INCOME TAXES	114,419	(75,270)	158,340	(84,150)
NET INCOME (LOSS)	$ (349,592)	$ 218,720	$ (514,898)	$ 249,684
NET INCOME (LOSS) PER SHARE, BASIC	$ (0.14)	$ 0.09	$ (0.20)	$ 0.1
NET INCOME (LOSS) PER SHARE, DILUTED	$ (0.14)	$ 0.09	$ (0.20)	$ 0.1
WEIGHTED AVERAGE SHARES, BASIC	2,454,116	2,454,116	2,454,116	2,454,116
WEIGHTED AVERAGE SHARES, DILUTED	2,454,116	2,454,116	2,454,116	2,454,116

Condensed Statement of Stockhol

Condensed Statement of Stockholders' Equity (Unaudited) - USD ($)	Common Stock	Retained Earnings	Total
Beginning balance at Dec. 31, 2018	$ 4,597,646	$ 1,563,091	$ 6,160,737
Net income		249,684	249,684
Stock based compensation expense related to stock options	3,221		3,221
Ending balance at Jun. 30, 2019	4,600,867	1,812,775	6,413,642
Beginning balance at Mar. 31, 2019	4,599,808	1,594,055	6,193,863
Net income		218,720	218,720
Stock based compensation expense related to stock options	1,059		1,059
Ending balance at Jun. 30, 2019	4,600,867	1,812,775	6,413,642
Beginning balance at Dec. 31, 2019	4,603,304	2,188,917	6,792,221
Net income		(514,898)	(514,898)
Stock based compensation expense related to stock options	32,423		32,423
Ending balance at Jun. 30, 2020	4,635,727	1,674,019	6,309,746
Beginning balance at Mar. 31, 2020	4,635,415	2,023,611	6,659,026
Net income		(349,592)	(349,592)
Stock based compensation expense related to stock options	312		312
Ending balance at Jun. 30, 2020	$ 4,635,727	$ 1,674,019	$ 6,309,746

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ (514,898)	$ 249,684
Adjustments to reconcile net income (loss) to net cash provided from (used in) operating activities
Depreciation and amortization	191,493	207,725
Provision for doubtful accounts, net change	5,000	0
Provision for inventory obsolescence, net change	42,265	7,500
Deferred taxes, net change	(11,516)	(7,616)
Stock based compensation expense related to stock options	32,423	3,221
Changes in operating assets and liabilities-
Accounts receivable	96,567	(230,626)
Inventories	(486,414)	(662,940)
Income taxes receivable	(146,807)	90,629
Prepaid expenses and other	(88,920)	(94,426)
Deposits and other	(58,823)	62,883
Accounts payable	96,684	109,760
Customer deposits	(47,951)	120,330
Accrued expenses	(79,974)	24,770
Deferred revenue	(4,365)	16,657
Net cash provided from (used in) operating activities	(975,236)	(102,449)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(9,088)	(128,614)
Patent filing expense	(18,772)	0
Net cash (used in) investing activities	(27,860)	(128,614)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments made on term loan	(22,899)	(22,156)
Proceeds from Paycheck Protection loan	465,097	0
Net cash (used in) financing activities	442,198	(22,156)
NET INCREASE (DECREASE) IN CASH	(560,898)	(253,219)
CASH, BEGINNING OF PERIOD	3,185,996	2,788,327
CASH, END OF PERIOD	2,625,098	2,535,108
SUPPLEMENTAL INFORMATION:
Cash paid for interest	27,605	28,349
Cash paid for income tax	$ 20,063	$ 0

1. ORGANIZATION AND NATURE OF B

1. ORGANIZATION AND NATURE OF BUSINESS	6 Months Ended
	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS	Lifeloc Technologies, Inc. ("Lifeloc" or the "Company") is a Colorado-based developer, manufacturer and marketer of portable hand-held and fixed station breathalyzers and related accessories, supplies and education. We design, produce and sell fuel-cell based breath alcohol testing equipment. We compete in all major segments of the breath alcohol testing instrument market, including law enforcement, workplace, corrections, original equipment manufacturing ("OEM") and consumer markets. In addition, we offer a line of supplies, accessories, services, and training to support customers' alcohol testing programs. We sell globally through distributors as well as directly to users. We define our business as providing "near and remote sensing" products and solutions. Today, the majority of our revenues are derived from products and services for alcohol detection and measurement. We remain committed to growing our breath alcohol testing business. In the future, we anticipate the commercialization of new sensing and measurement products that may allow Lifeloc to successfully expand our business into new growth areas where we do not presently compete or where no satisfactory product solutions exist today. Lifeloc incorporated in Colorado in December 1983. We filed a registration statement on Form 10 with the Securities and Exchange Commission, which became effective on May 31, 2011. Our fiscal year end is December 31. Our principal executive offices are located at 12441 West 49th Avenue, Unit 4, Wheat Ridge, Colorado 80033-3338. Our telephone number is (303) 431-9500. Our websites are www.lifeloc.com, www.lifeguardbreathtester.com, and www.stsfirst.com. Information contained on our websites does not constitute part of this Form 10-Q.

2. SUMMARY OF SIGNIFICANT ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Basis of Presentation Use of Estimates in the Preparation of Financial Statements. Fair Value Measurement Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Inventories. 2020 2019 Raw materials & deposits $ 2,024,766 $ 1,601,354 Work-in-process 37,159 32,006 Finished goods 550,788 492,939 Total gross inventories 2,612,713 2,126,299 Less reserve for obsolescence (182,265 ) (140,000 ) Total net inventories $ 2,430,448 $ 1,986,299 Income Taxes. Accounting for Income Taxes The estimated annual effective tax rate is applied to the year-to-date ordinary income (or loss) at the end of the interim period. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Revenue Recognition. Revenue from Contracts with Customers (Topic 606). Revenue from product sales and supplies is generally recorded when we ship the product and title has passed to the customer, provided that we have evidence of a customer arrangement and can conclude that collection is probable. The prices at which we sell our products are fixed and determinable at the time we accept a customer's order. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims, and generally have no ongoing obligations related to product sales, except for normal warranty. The sales of licenses to our training courses are recognized as revenue at the time of sale. Training and certification revenues are recognized at the time the training and certification occurs. Data recording revenue is recognized based on each day’s usage of enrolled devices. Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for customer financing and leasing ourselves, which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract. Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured. Rental income from space leased to our tenants is recognized in the month in which it is due, which approximates if it were recognized on a straight-line basis over the term of the related lease. On occasion we receive customer deposits for future product orders and product developments. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer, or when agreed milestones are met in the case of product developments. Topic 606 requires the disaggregation of revenue into broad categories, which we have defined as shown below for the three and six months ended June 30, 2020 and 2019. Three Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 1,131,928 $ 1,956,028 Training, certification and data recording 116,709 181,313 Service plans and equipment rental 17,061 29,293 Products subtotal 1,265,698 2,166,634 Royalties 32,851 150,146 Building rentals 21,489 20,942 Total revenues $ 1,320,038 $ 2,337,722 Six Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 2,899,068 $ 3,756,811 Training, certification and data recording 264,891 327,809 Service plans and equipment rental 39,605 52,115 Products subtotal 3,203,564 4,136,735 Royalties 92,132 222,984 Building rentals 42,678 46,764 Total revenues $ 3,338,374 $ 4,406,483 Deferred Revenue. Recent Accounting Pronouncements Stock-Based Compensation Compensation – Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for the three months ended June 30, 2020 and 2019 was $312 and $0 respectively, and for the six months ended June 30, 2020 and 2019 it was $32,423 and $3,221 respectively. These amounts consist of stock-based compensation expenses from grants of employee stock options which are allocated to General and Administrative Expense when incurred. Segment Reporting.

3. BASIC AND DILUTED INCOME (LO

3. BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	6 Months Ended
	Jun. 30, 2020
Earnings Per Share [Abstract]
NOTE 3 - BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	We report both basic and diluted net income (or loss) per common share. Basic net income (or loss) per common share is computed by dividing net income (or loss) for the period by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period if the effect of the potential common shares is dilutive. The shares used in the calculation of dilutive potential common shares exclude options to purchase shares where the exercise price was greater than the average market price of common shares for the period. The shares used in the calculation of dilutive potential common shares exclude options to purchase shares in loss periods since they are anti-dilutive. The following table presents the calculation of basic and diluted net income (loss) per common share for three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, 2020 2019 Net income (loss) $ (349,592 ) $ 218,720 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,454,116 Net income (loss) per share-basic $ (0.14 ) $ 0.09 Net income (loss) per share-diluted $ (0.14 ) $ 0.09 Contingently vesting employee stock options 12,500 50,000 Six Months Ended June 30, 2020 2019 Net income (loss) $ (514,898 ) $ 249,684 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,454,116 Net income (loss) per share-basic $ (0.20 ) $ 0.10 Net income (loss) per share-diluted $ (0.20 ) $ 0.10 Contingently vesting employee stock options 12,500 50,000

4. STOCKHOLDERS' EQUITY

4. STOCKHOLDERS' EQUITY	6 Months Ended
	Jun. 30, 2020
STOCKHOLDERS' EQUITY:
NOTE 4 - STOCKHOLDERS' EQUITY	The following table summarizes information about employee stock options outstanding and exercisable at June 30, 2020: STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $6.00 12,500 2.25 $6.00 — — $5.51 3,000 4.33 $5.51 3,000 $5.51 $3.80 92,698 4.67 $3.80 92,698 $3.80 The exercise price of all options granted through June 30, 2020 has been equal to or greater than the fair market value of the Company's common stock at the time the options were issued. We granted 50,000 options to an officer in January of 2016, which vested based on the achievement of certain performance conditions. These options were cancelled and reissued in an amendment on October 1, 2017. Of the 50,000 granted options, 25,000 expired without vesting on December 31, 2019 and 12,500 expired without vesting on June 30, 2020. Vesting of the remaining 12,500 options is subject to performance achieved during the years ending December 31, 2020 and 2021. An additional total of 110,500 options were granted during the six months ended June 30, 2020, 48,000 of which were granted to two officers and three directors. Out of that 48,000, the officers were granted 37,500 and 7,500 and the directors were granted 1,000 each. These options vested immediately upon granting. No options were exercised during the six months ended June 30, 2020 or during the six months ended June 30, 2019. The total number of authorized shares of common stock continues to be 50,000,000 with no change in the par value per share.

5. COMMITMENTS AND CONTINGENCIE

5. COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
NOTE 5 - COMMITMENTS AND CONTINGENCIES	Mortgage Expense 2020 $ 23,065 2021 48,021 2022 50,005 2023 52,071 2024 1,178,528 Total 1,351,690 Less financing cost (4,701 ) Net term loan payable 1,346,989 Less current portion (45,966 ) Long term portion $ 1,301,023 Employee Severance Benefits Contractual Commitments and Purchase Orders Regulatory Commitments

6. LINE OF CREDIT AND PAYCHECK

6. LINE OF CREDIT AND PAYCHECK PROTECTION LOAN	6 Months Ended
	Jun. 30, 2020
Line of Credit Facility [Abstract]
NOTE 6 - LINE OF CREDIT AND PAYCHECK PROTECTION LOAN	As part of the long-term financing of our property purchased on October 31, 2014, we obtained a one-year $250,000 revolving line of credit facility with Bank of America, which matured on October 31, 2015 and was extended to June 30, 2018, and bears interest at a rate equal to the LIBOR daily floating rate of .12088% and 2.382% on June 30, 2020 and 2019, respectively, plus 2.5%. The agreement was amended to increase the amount of the line to $750,000 and extend the maturity date to June 30, 2021. The revolving line of credit facility is secured by all personal property and assets, whether now owned or hereafter acquired, wherever located. There was no balance due on the line of credit as of June 30, 2020 and December 31, 2019. The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (“PPP”), the initiative provides federally guaranteed loans to small businesses. A portion or all of these loans may be forgiven if borrowers comply with certain PPP guidelines including spending the funds on authorized expenses and maintaining their payrolls during the crisis or restore their payrolls afterward. On May 4, 2020, the Company received proceeds of $465,097 from Bank of America under the PPP (the “PPP Loan”). The PPP Loan has a two-year term, a maturity date of May 3, 2022, and interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The PPP Loan note contains events of default and other provisions customary for a loan of this type. The PPP provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. The Company intends to use the entire PPP Loan amount for qualifying expenses and to apply for forgiveness of the loan in accordance with the terms of the CARES Act and subsequent legislation. The terms of potential forgiveness may also be subject to further requirements in any regulations and guidelines the U.S. Small Business Administration may adopt. While the Company currently believes that its use of the Note proceeds will meet the conditions for forgiveness under the Paycheck Protection Program, no assurance is provided that the Company will obtain forgiveness of the Note in whole or in part.

7. INCOME TAXES

7. INCOME TAXES	6 Months Ended
	Jun. 30, 2020
Income Tax Disclosure [Abstract]
NOTE 7 - INCOME TAXES	The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for (benefit from) income taxes consists of the following: Three Months Ended June 30, 2020 2019 Federal statutory rate $ (97,442 ) $ 61,738 Effect of: State taxes, net of federal tax benefit 21,469 (14,370 ) Estimated research and development credits — (3,042 ) Other (38,446 ) 30,944 Total $ (114,419 ) $ 75,270 Six Months Ended June 30, 2020 2019 Federal statutory rate $ (141,380 ) $ 70,105 Effect of: State taxes, net of federal tax benefit 29,650 (17,004 ) Estimated research and development credits — (6,115 ) Other (46,610 ) 37,164 Total $ (158,340 ) $ 84,150

8. BUSINESS SEGMENTS

8. BUSINESS SEGMENTS	6 Months Ended
	Jun. 30, 2020
Segment Reporting [Abstract]
NOTE 8 - BUSINESS SEGMENTS	We currently have two business segments: (i) the sale of physical products, including portable hand-held breathalyzers and related accessories, supplies, education, training ("Product Sales"), and royalties from development contracts with OEM manufacturers ("Royalties" and, together with Product Sales, the "Products" segment), and (ii) rental of a portion of our building (the "Rentals" segment). The accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 2. Operating profits for these segments exclude unallocated corporate items. Administrative and staff costs were commonly used by all business segments and were indistinguishable. The following sets forth information about the operations of the business segments for the three months ended June 30, 2020 and 2019. 2020 2019 Product sales $ 1,265,698 $ 2,166,634 Royalties 32,851 150,146 Products subtotal 1,298,549 2,316,780 Rentals 21,489 20,942 Total $ 1,320,038 $ 2,337,722 Gross profit: Product sales $ 285,890 $ 1,000,472 Royalties 32,851 150,146 Products subtotal 318,741 1,150,618 Rentals 9,328 4,516 Total $ 328,069 $ 1,155,134 Interest expense: Product sales $ 9,205 $ 9,499 Royalties — — Products subtotal 9,205 9,499 Rentals 4,811 4,969 Total $ 14,016 $ 14,468 Net income (loss) before taxes: Product sales $ (501,379 ) $ 144,297 Royalties 32,851 150,146 Products subtotal (468,528 ) 294,443 Rentals 4,517 (453 ) Total $ (464,011 ) $ 293,990 The following sets forth information about the operations of the business segments for the six months ended June 30, 2020 and 2019. 2020 2019 Product sales $ 3,203,564 $ 4,136,735 Royalties 92,132 222,984 Products subtotal 3,295,696 4,359,719 Rentals 42,678 46,764 Total $ 3,338,374 $ 4,406,483 Gross profit: Product sales $ 1,000,184 $ 1,850,709 Royalties 92,132 222,984 Products subtotal 1,092,316 2,073,693 Rentals 13,829 13,643 Total $ 1,106,145 $ 2,087,336 Interest expense: Product sales $ 18,485 $ 17,761 Royalties — — Products subtotal 18,485 17,761 Rentals 9,662 11,130 Total $ 28,147 $ 28,891 Net income (loss) before taxes: Product sales $ (769,537 ) $ 108,337 Royalties 92,132 222,984 Products subtotal (677,405 ) 331,321 Rentals 4,167 2,513 Total $ (673,238 ) $ 333,834 There were no intersegment revenues. At June 30, 2020, $616,183 of our assets were used in the Rentals segment, with the remainder, $8,333,270, used in the Products and unallocated segments.

9. SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2020
Subsequent Events [Abstract]
NOTE 9 - SUBSEQUENT EVENTS	We evaluated all of our activity and concluded that no subsequent events have occurred that would require recognition in our financial statements or disclosure in the notes to our financial statements.

2. SUMMARY OF SIGNIFICANT ACC_2

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
Basis of Presentation	These statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") and accounting principles generally accepted in the United States ("GAAP") for interim financial information. They do not include all information and notes required by GAAP for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to financial statements included in Lifeloc's Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the SEC. In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of normal recurring accruals necessary for a fair presentation of the financial position as of June 30, 2020 and December 31, 2019, and the results of operations and cash flows for the three and six month periods ended June 30, 2020 and 2019. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for a full year. The Company's 2019 Annual Report on Form 10-K includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Form 10-Q.
Use of Estimates in the Preparation of Financial Statements	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expense during the reporting period. Actual results could differ from those estimates.
Fair Value Measurement	Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equity securities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Inventories	Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. We reduce inventory for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. At June 30, 2020 and December 31, 2019, inventory consisted of the following: 2020 2019 Raw materials & deposits $ 2,024,766 $ 1,601,354 Work-in-process 37,159 32,006 Finished goods 550,788 492,939 Total gross inventories 2,612,713 2,126,299 Less reserve for obsolescence (182,265 ) (140,000 ) Total net inventories $ 2,430,448 $ 1,986,299
Income Taxes	We account for income taxes under the provisions of ASC Topic 740, Accounting for Income Taxes The estimated annual effective tax rate is applied to the year-to-date ordinary income (or loss) at the end of the interim period. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Revenue Recognition	In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). Revenue from product sales and supplies is generally recorded when we ship the product and title has passed to the customer, provided that we have evidence of a customer arrangement and can conclude that collection is probable. The prices at which we sell our products are fixed and determinable at the time we accept a customer's order. We recognize revenue from sales to stocking distributors when there is no right of return, other than for normal warranty claims, and generally have no ongoing obligations related to product sales, except for normal warranty. The sales of licenses to our training courses are recognized as revenue at the time of sale. Training and certification revenues are recognized at the time the training and certification occurs. Data recording revenue is recognized based on each day’s usage of enrolled devices. Revenues arising from extended warranty contracts are booked as sales over their life on a straight-line basis. We have discontinued arranging for customer financing and leasing through unrelated third parties and instead are providing for customer financing and leasing ourselves, which we recognize as revenue over the applicable lease term. Occasionally, we rent used equipment to customers, and in those cases, we recognize the revenues as they are earned over the life of the contract. Royalty income is recognized in accordance with agreed upon terms, when performance obligations are satisfied, the amount is fixed or determinable and collectability is reasonably assured. Rental income from space leased to our tenants is recognized in the month in which it is due, which approximates if it were recognized on a straight-line basis over the term of the related lease. On occasion we receive customer deposits for future product orders and product developments. Customer deposits are initially recorded as a liability and recognized as revenue when the product is shipped and title has passed to the customer, or when agreed milestones are met in the case of product developments. Topic 606 requires the disaggregation of revenue into broad categories, which we have defined as shown below for the three and six months ended June 30, 2020 and 2019. Three Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 1,131,928 $ 1,956,028 Training, certification and data recording 116,709 181,313 Service plans and equipment rental 17,061 29,293 Products subtotal 1,265,698 2,166,634 Royalties 32,851 150,146 Building rentals 21,489 20,942 Total revenues $ 1,320,038 $ 2,337,722 Six Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 2,899,068 $ 3,756,811 Training, certification and data recording 264,891 327,809 Service plans and equipment rental 39,605 52,115 Products subtotal 3,203,564 4,136,735 Royalties 92,132 222,984 Building rentals 42,678 46,764 Total revenues $ 3,338,374 $ 4,406,483
Deferred Revenue	Deferred revenues arise from service contracts and from development contracts. Revenues from service contracts are recognized on a straight-line basis over the life of the contract, generally one year, and are included in product revenue in our statements of income. However, there are occasions when they are written for longer terms up to four years. The revenues from that portion of the contract that extend beyond one year are shown in our balance sheets as long term. Deferred revenues also result from progress payments received on development contracts; those revenues are recognized when the contract is complete, and are included in product revenue in our statements of income. All development contracts are for less than one year and all deferred revenues from this source are shown in our balance sheets as short term.
Recent Accounting Pronouncements	We have reviewed all recently issued, but not yet effective, accounting pronouncements and do not expect them to have a material effect on our financial statements.
Stock-Based Compensation	Stock-based compensation is presented in accordance with the guidance of ASC Topic 718, Compensation – Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the accompanying statement of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. We used the Black-Scholes option-pricing model to determine fair value. Our determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Although the fair value of employee stock options is determined in accordance with ASC 718 using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction. Stock-based compensation expense recognized under ASC 718 for the three months ended June 30, 2020 and 2019 was $312 and $0 respectively, and for the six months ended June 30, 2020 and 2019 it was $32,423 and $3,221 respectively. These amounts consist of stock-based compensation expenses from grants of employee stock options which are allocated to General and Administrative Expense when incurred.
Segment Reporting	We have concluded that we have two operating segments, including our primary business which is as a developer, manufacturer, lessor and marketer of portable hand-held breathalyzers and related accessories, supplies, education, training and royalties from development contracts. As a result of purchasing our building on October 31, 2014, we have a second business segment consisting of renting portions of our building to existing tenants, whose leases expire at various times until June 30, 2023.

2. SUMMARY OF SIGNIFICANT ACC_3

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Jun. 30, 2020
Accounting Policies [Abstract]
Inventories	2020 2019 Raw materials & deposits $ 2,024,766 $ 1,601,354 Work-in-process 37,159 32,006 Finished goods 550,788 492,939 Total gross inventories 2,612,713 2,126,299 Less reserve for obsolescence (182,265 ) (140,000 ) Total net inventories $ 2,430,448 $ 1,986,299
Disaggregation of revenue	Three Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 1,131,928 $ 1,956,028 Training, certification and data recording 116,709 181,313 Service plans and equipment rental 17,061 29,293 Products subtotal 1,265,698 2,166,634 Royalties 32,851 150,146 Building rentals 21,489 20,942 Total revenues $ 1,320,038 $ 2,337,722 Six Months Ended June 30, Product sales: 2020 2019 Product sales and supplies $ 2,899,068 $ 3,756,811 Training, certification and data recording 264,891 327,809 Service plans and equipment rental 39,605 52,115 Products subtotal 3,203,564 4,136,735 Royalties 92,132 222,984 Building rentals 42,678 46,764 Total revenues $ 3,338,374 $ 4,406,483

3. BASIC AND DILUTED INCOME PER

3. BASIC AND DILUTED INCOME PER COMMON SHARE (Tables)	6 Months Ended
	Jun. 30, 2020
Earnings Per Share [Abstract]
Basic and diluted net income per share	Three Months Ended June 30, 2020 2019 Net income (loss) $ (349,592 ) $ 218,720 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,454,116 Net income (loss) per share-basic $ (0.14 ) $ 0.09 Net income (loss) per share-diluted $ (0.14 ) $ 0.09 Contingently vesting employee stock options 12,500 50,000 Six Months Ended June 30, 2020 2019 Net income (loss) $ (514,898 ) $ 249,684 Weighted average shares-basic 2,454,116 2,454,116 Effect of dilutive potential common shares — — Weighted average shares-diluted 2,454,116 2,454,116 Net income (loss) per share-basic $ (0.20 ) $ 0.10 Net income (loss) per share-diluted $ (0.20 ) $ 0.10 Contingently vesting employee stock options 12,500 50,000

4. STOCKHOLDERS' EQUITY (Tables

4. STOCKHOLDERS' EQUITY (Tables)	6 Months Ended
	Jun. 30, 2020
STOCKHOLDERS' EQUITY:
Stock options outstanding and exercisable	STOCK OPTIONS OUTSTANDING STOCK OPTIONS EXERCISABLE Range of Exercise Prices Number Outstanding Weighted-Average Remaining Contractual Life (in Years) Weighted-Average Exercise Price per Share Number Exercisable Weighted-Average Exercise Price per Share $6.00 12,500 2.25 $6.00 — — $5.51 3,000 4.33 $5.51 3,000 $5.51 $3.80 92,698 4.67 $3.80 92,698 $3.80

5. COMMITMENTS AND CONTINGENC_2

5. COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Minimum future lease payments	2020 $ 23,065 2021 48,021 2022 50,005 2023 52,071 2024 1,178,528 Total 1,351,690 Less financing cost (4,701 ) Net term loan payable 1,346,989 Less current portion (45,966 ) Long term portion $ 1,301,023

7. INCOME TAXES (Tables)

7. INCOME TAXES (Tables)	6 Months Ended
	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Schedule of income tax reconciliation	Three Months Ended June 30, 2020 2019 Federal statutory rate $ (97,442 ) $ 61,738 Effect of: State taxes, net of federal tax benefit 21,469 (14,370 ) Estimated research and development credits — (3,042 ) Other (38,446 ) 30,944 Total $ (114,419 ) $ 75,270 Six Months Ended June 30, 2020 2019 Federal statutory rate $ (141,380 ) $ 70,105 Effect of: State taxes, net of federal tax benefit 29,650 (17,004 ) Estimated research and development credits — (6,115 ) Other (46,610 ) 37,164 Total $ (158,340 ) $ 84,150

8. BUSINESS SEGMENTS (Tables)

8. BUSINESS SEGMENTS (Tables)	6 Months Ended
	Jun. 30, 2020
Segment Reporting [Abstract]
Schedule of segment reporting	segments and were indistinguishable. The following sets forth information about the operations of the business segments for the three months ended June 30, 2020 and 2019. 2020 2019 Product sales $ 1,265,698 $ 2,166,634 Royalties 32,851 150,146 Products subtotal 1,298,549 2,316,780 Rentals 21,489 20,942 Total $ 1,320,038 $ 2,337,722 Gross profit: Product sales $ 285,890 $ 1,000,472 Royalties 32,851 150,146 Products subtotal 318,741 1,150,618 Rentals 9,328 4,516 Total $ 328,069 $ 1,155,134 Interest expense: Product sales $ 9,205 $ 9,499 Royalties — — Products subtotal 9,205 9,499 Rentals 4,811 4,969 Total $ 14,016 $ 14,468 Net income (loss) before taxes: Product sales $ (501,379 ) $ 144,297 Royalties 32,851 150,146 Products subtotal (468,528 ) 294,443 Rentals 4,517 (453 ) Total $ (464,011 ) $ 293,990 The following sets forth information about the operations of the business segments for the six months ended June 30, 2020 and 2019. 2020 2019 Product sales $ 3,203,564 $ 4,136,735 Royalties 92,132 222,984 Products subtotal 3,295,696 4,359,719 Rentals 42,678 46,764 Total $ 3,338,374 $ 4,406,483 Gross profit: Product sales $ 1,000,184 $ 1,850,709 Royalties 92,132 222,984 Products subtotal 1,092,316 2,073,693 Rentals 13,829 13,643 Total $ 1,106,145 $ 2,087,336 Interest expense: Product sales $ 18,485 $ 17,761 Royalties — — Products subtotal 18,485 17,761 Rentals 9,662 11,130 Total $ 28,147 $ 28,891 Net income (loss) before taxes: Product sales $ (769,537 ) $ 108,337 Royalties 92,132 222,984 Products subtotal (677,405 ) 331,321 Rentals 4,167 2,513 Total $ (673,238 ) $ 333,834

2. SUMMARY OF SIGNIFICANT ACC_4

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Inventories
Raw materials & deposits	$ 2,024,766	$ 1,601,354
Work-in-process	37,159	32,006
Finished goods	550,788	492,939
Total gross inventories	2,612,713	2,126,299
Less reserve for obsolescence	(182,265)	(140,000)
Total net inventories	$ 2,430,448	$ 1,986,299

2. SUMMARY OF SIGNIFICANT ACC_5

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Accounting Policies [Abstract]
Product sales and supplies	$ 1,131,928	$ 1,956,028	$ 2,899,068	$ 3,756,811
Training, certification and data recording	116,709	181,313	264,891	327,809
Service plans and equipment rental	17,061	29,293	39,605	52,115
Product sales subtotal	1,265,698	2,166,634	3,203,564	4,136,735
Royalties	32,851	150,146	92,132	222,984
Building rentals	21,489	20,942	42,678	46,764
Total revenues	$ 1,320,038	$ 2,337,722	$ 3,338,374	$ 4,406,483

3. BASIC AND DILUTED INCOME P_2

3. BASIC AND DILUTED INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Net income (loss)	$ (349,592)	$ 218,720	$ (514,898)	$ 249,684
Weighted-average shares - basic	2,454,116	2,454,116	2,454,116	2,454,116
Effect of dilutive potential common shares	0	0	0	0
Weighted-average shares - diluted	2,454,116	2,454,116	2,454,116	2,454,116
Net income (loss) per share - basic	$ (0.14)	$ 0.09	$ (0.20)	$ 0.1
Net income (loss) per share - diluted	$ (0.14)	$ 0.09	$ (0.20)	$ 0.1
Contingently vesting employee stock options	12,500	50,000	12,500	50,000

4. STOCKHOLDERS' EQUITY (Detail

4. STOCKHOLDERS' EQUITY (Details)	6 Months Ended
	Jun. 30, 2020$ / sharesshares
Stock Option 1
Range of exercise prices	$ 6
Option outstanding | shares	12,500
Weighted average remaining contractual life (in years)	2 years 3 months
Weighted average exercise price per share	$ 6
Number exercisable | shares	0
Weighted average exercise price per share	$ .00
Stock Option 2
Range of exercise prices	$ 5.51
Option outstanding | shares	12,500
Weighted average remaining contractual life (in years)	4 years 3 months 29 days
Weighted average exercise price per share	$ 5.51
Number exercisable | shares	3,000
Weighted average exercise price per share	$ 5.51
Stock Option 3
Range of exercise prices	$ 3.80
Option outstanding | shares	92,698
Weighted average remaining contractual life (in years)	4 years 8 months 1 day
Weighted average exercise price per share	$ 3.80
Number exercisable | shares	92,698
Weighted average exercise price per share	$ 3.80

4. STOCKHOLDERS' EQUITY (Deta_2

4. STOCKHOLDERS' EQUITY (Details Narrative) - shares	Jun. 30, 2020	Dec. 31, 2019
STOCKHOLDERS' EQUITY:
Common stock, authorized	50,000,000	50,000,000

5. COMMITMENTS AND CONTINGENC_3

5. COMMITMENTS AND CONTINGENCIES (Details)	Jun. 30, 2020USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 23,065
2021	48,021
2022	50,005
2023	52,071
2024	1,178,528
Total	1,351,690
Less financing cost	(4,701)
Net loan payable	1,346,989
Less current portion	(45,966)
Long term portion	$ 1,301,023

7. INCOME TAXES (Details)

7. INCOME TAXES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Federal statutory rate	$ (97,442)	$ 61,738	$ (141,380)	$ 70,105
State taxes, net of federal tax benefit	21,469	(14,370)	29,650	(17,004)
Estimated research and development credits	0	(3,042)	0	(6,115)
Other	(38,446)	30,944	(46,610)	37,164
Total	$ (114,419)	$ 75,270	$ (158,340)	$ 84,150

8. BUSINESS SEGMENTS (Details)

8. BUSINESS SEGMENTS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue	$ 1,320,038	$ 2,337,722	$ 3,338,374	$ 4,406,483
Gross profit	328,069	1,155,134	1,106,145	2,087,336
Interest expense	14,016	14,468	28,147	28,891
Net income (loss) before taxes	(464,011)	293,990	(673,238)	333,834
Products
Revenue	1,265,698	2,166,634	3,203,564	4,136,735
Gross profit	285,890	1,000,472	1,000,184	1,850,709
Interest expense	9,205	9,499	18,485	17,761
Net income (loss) before taxes	(501,379)	144,297	(769,537)	108,337
Royalties
Revenue	32,851	150,146	92,132	222,984
Gross profit	32,851	150,146	92,132	222,984
Interest expense	0	0	0	0
Net income (loss) before taxes	32,851	150,146	92,132	222,984
Subtotal
Revenue	1,298,549	2,316,780	3,295,696	4,359,719
Gross profit	318,741	1,150,618	1,092,316	2,073,693
Interest expense	9,205	9,499	18,485	17,761
Net income (loss) before taxes	(468,528)	294,443	(677,405)	331,321
Rentals
Revenue	21,489	20,942	42,678	46,764
Gross profit	9,328	4,516	13,829	13,643
Interest expense	4,811	4,969	9,662	11,130
Net income (loss) before taxes	$ 4,517	$ (453)	$ 4,167	$ 2,513